Archive for May, 2008

Risks in speculation over Credit crisis, recession, oil dollar Dr. Warren Huang

Saturday, May 17th, 2008
Comment by Warren Huang Wall Street Journal Market Beat Blog- May 17, 2008 at 1:32pm Stock market bull are struggling to make sustainable rally bsed on oil prices plunge, at today oil making 128 new high, it try to use Benanke, Paulson optimimic view on credit crisis and second half economic recovery, the dollar rebound to soaring oil, inflation related rate hike support. Ignoring miserable back ground, consumer confidence sank to 1980 deep recession low, and houjsing prices and single family start continue making new low, despite rebound in apartment building, on top of 10  month unsold inventory Market bulls are getting irrational , emotional in high speculative mood repeating last summer, use any piece good news from M/A, IPO, oil, dollar, Fed, to discard all bad news. hope we do not repeat lasst summer betting on the wrong direction. Do not expect raise oil production, strength of dollar to drag down the crude oil price in peak summer demand. From my 30 years tracking of global crude oil price price mechanism, dollar and demand carry the same weight on price movement, and even dollar upword potential is limited, given prolong, US housing market sump, Fed will not be able to raise too much rate to cool of the inflation, to kill the housing markets. so, oil still have upword potential driven by stimulus package support spending. details on  www.osawh.com/Globaloiln.htm www.osawh.com/currency.html www.osawh.com/mortdefa.htm www.osawh.com/fund2008.htm

Identify, control of asset bubble Dr. Warren Huang

Thursday, May 15th, 2008
 

Comment by Warren Huang - May 15, 2008 at 2:03 pm on How to identify  and control asset bubble on Wall Street Journal Real Time Economic Blog

From my tracking, proactive structural simulation of last 30 years global energy, housing, IT bubbles burst results shown that all asst bubble formation can be idnetified 3 years ahead, I warned on Asian/China finance, capital market conference, Singapore, Shangahi, Beijin, Nov. 2003 that US /China housing bubble overheating, facing rate hike summer 2004, US and China central banks did rate rate to cool housing, Fed cut money supply growth from 6 % to 2005 3.5 %, after Greenspan 17 raise rates, housing sales and price start peaking out in 2006.  However, after Bernanke stop rate hike in 2006, money supply growth up from 4 % to 6.5 % in 2007, excessive liquidity resulted subprime mortgage crisis, If Fed continue adapt tight money policy credit rating through 2007, it will stop many questionable sub prime loans. despite housing bubble may burst, we will be already recovered now. Fed should not yield to political pressure in dealing with asset bubble, same was true for 1996- 1998 IT stock prices bubble identification and continue credit tightening ing. will avoided 2000 bubble burst ( Nasdaq would just up to 3000 not 5100, much small bubble easier to deal with. China follow US Fed, enjoyed macroeconomic and housing market soft landing in 2005 inflation down to 1.2 % after China Peoples Bank reduce the money supply growth from 24 to 13, housing price was up 200 % in 2004, plunged 30 % in 2005, stock prices plunged from 2000 to 1100. However, after CPBC follow US FEd stop credit tightening, money supply explode from 15 % to 20 %, stock market soared from 1400 to 6300, housing prices up 300 % again in 2007. and forced CPBC 6 times rate hike, 14 time raise bank deposit ratio to remove excessive liquidity from housing stock markets wealth gain, stock prices plunged 50 %, housing prices still up 13 %, despite housing sales slump, I warned on this blog last Sept that US housing price slump continue into this summer despite aggressive rate cuts, drag economy into recession, stock market bear correction. We still have one third cities housing prices continue growing bubble, making bigger bubbles despite housing sales slump and doubling foreclosure , mounting job cuts, slump inn consumer confidence.This proactive, structural US national and regional housing prices, and mortgage defaults simulation forecast years, ahead national , regional housing price. So, the answer is yes, Asset prices can be identified and asset price bursts, credit, financial crisis can be avoided by a decisive , independent central bank applying proactive structural decision simulators and predictive monetary policy, economic, fiscal policy control the bubble growth, before it getting too big. Theseresults have been presented to 12 countries central bank governors, risk management conferences last 12 years, covering the causes, oset, dpread, recovery, early warning of global financial crisis and asset prices bubble burst. details on www.osawh.com/riskm.html www.osawh.com/Fedcrisab.htm www.osawh.com/centmaf.html www.osawh.com/recession.html www.osawh.com/mortdefa.htm

US national, regional housing price Forecast Dr. Warren Huang

Wednesday, May 14th, 2008
omment by Warren Huang Wall Street Journal Real estate Development Blog - May 14, 2008 at 6:35 pm
From the data shown we, still have one third of cities Housing price gain, despite average price down 6.7 %. From the past US global housing bubble bursts, we are still at the early stage of housing price correction, this is especially for high end housing, just too high to be afford. and the mounting job cuts, foreclosure will continue drag housing prices slump into this summer. may be down 30- 50 % in some cites. while the average housing price must down 20- 30 %.My US national and regional housing price can be calculated from national, local unemployment, mortgage rate, money supply growth, foreclosure data. details can be found www.osawh.com/mortdefa.htm and www.osawh.com/UShouswksp.htm One more variable to add, the stock price index in regional cities, for high tech cities, use Nasdaq, for banking finance center use DOw Jones, or banking index. like Seatle, San Jose use Nasdaq,New York city use Dow Jones index Comment by Warren Huang - May 14, 2008 at 6:38 pm

Retail sale, oil price and HP merger on Dow Jones Dr. Warren Huang

Tuesday, May 13th, 2008
April retail sales has been distorted by advance payment for low end consumer goods (below 400 dollars out of gasoline, food payment left from 600 stimulus package for rebate check, as already shown on surge on March credit card). While the big tocket above 400 like computer, automobile plunged due to recesion impact. This one time spike only help second quarter barely escape recession. The economy will follow housing price slump and job cuts into inflationary recession again. I predicted last Sept on this blog that Fed aggressive rate cuts will drag dollar, driving oil to 130, commodities price more than double and soaring inflation, 10 year bond yield break 4 % this summer, eventualy stock market bear correction. I have speaking to dozens US and European structural finance finance and central banks governors conferences since 1999 and 2003 that ABS na MBS, CDO based on statistical asset priceing and credit default rating will lead to betting on the wrong side of interest rateas and trillion dollar loss in US and European housing bubble burst and mortgage, credit crisis. I warned on Deal journal few days ago,that HP csh buy out low end low profit margin data processing company EDS to compete with IBM will not work. It need high end strategic BPO strategic supply demand chain to compete with Oracle, IBM. HP stocks plunge drag Dow down 40 points. I also warned last week market speculators use dollar rebound, and oil price setback to drive up Dow is not sustaonable, due to oil price will keep making new high due to rebate check and consumer peak summer demand, and dollar will be traded in narrow range due to US housing market slump. Today oil soared to new high, Dow lose ground even Dollar up to 104 Yen details on www.osawh.com/mortdefa.htm www.osawh.com/STouts.html www.osawh.com/fund2008.htm www.osaglobalstrategicmanagement.com/blog1 daily blog
Comment by Warren Huang Wall Street Journal Market Beat Blog- May 13, 2008 at 6:39 pm

Stocks , Dollar, oil price outlook Dr. Warren Huang

Thursday, May 8th, 2008
US Stocks plunge in correction to housing market slump, ECB  hold interest rate cut, Dollar gain strength  Oil prices  , inflation worry continue

Comment by Warren Huang on Wall Street Journal Market Beat Blog - May 7, 2008 at  7:37 pm

Stock market plunged 206, finally give up its recent gain on banking, finance, IT shares despite mounting write down and loss in mortgage loan default. It is not because of oil price soared to record level ( It is used to it , even gain on oil shares performances.) Bullish speculators speculate the worst of credit crisis is over, in led to over 30 -50 % gain in these share, will loss most of its gain in a bear trap, as housing price slump will continue, soaring oil, commodities price, foreclosure, job cut drag consumer confidence to deep recession level. Betting on the interest rate and banking, finance, housing market rebound will repeat last summer trillion dollar loss, facing double dip inflationary recession in Feds ending rate cuts cycle.10 year bond yield will repeat last summer break 4 % It is premature to speculate ECB will cuts rate before summer at current oil, commodities prices and inflation level. So dollar has limited speculation room as rising oil price, inflation. But Fed is not to switch to rate hike cycle before housing price slump ends. details on www.osawh.coom/Fedcrisab.html www.osawh.com/mortdefa.htm www.osawh.com/riskm.html

OSA Market Blog, Market ovehested, Oil peaking out 130 Dr. Warren Huang

Tuesday, May 6th, 2008
Comment by Warren Huang -Wall Street Journal Market Beat May 6, 2008  and  osaglobalstrategicmanagement.com/ blog1 at 6:25 pm
The market is repeating its last August speculative mood, chasing on banking, high tech stocks push Dow to 14200 new high, this time over 13000, trying to break downtrend., despite housing markets slump, soaring oil, commodities prices, job cuts and banking, finance mounting loss in write down. The market optimism built on shaking ground, betting on housing, banking, high tech sectors rebound, will lead to another trillion dollar loss. Goldman’s prediction of 200 dollar oil price is against market supply demand fundamental mechanism. Oil price bubble will burst before 200.consumers just can not afford to pay for that price. We will have long, deep inflationary recession with us, even stimulus package rate cuts will not be able to achieve sustainable recovery this year. We have already seen the worst of dollar weakness at almost the end of current rate cuts cycle, the soaring oil price will push inflation higher, all will give support to US dollar. Gasoline and heating oil are still the major demand driving force for oil price. It is the spring, summer gasoline demand drive the oil price from 80 to 120. stronger dollar supported by inflation fighting will drag oil price lower, current oil price spike is expectation of stimulus package boost jet fuel and gasoline demand this summer. We may see oil price breakout to 130, not much beyond that. details on www.osawh.com/Globaloiln.htm www.osawh.com/oilpetpri.html www.osawh.coom/currency.html

Dollar outlook , impact on industrial sectors performance Dr. Warren Huang

Monday, May 5th, 2008

US dollar outlook and its impact on industrial sectors  performance, 

Comment by Warren Huang -Wall Street Journal Market Beat Blog May 5, 2008 at 2:10 pm
We have to look at the dollar fundamental price and its impact on industrial sectors mechanism to track its prices. There are not easy statistical correlation. Dollar bull due to 6 years economic expansion and rate hikes series, while dollar weakness due to economic slowdown, recession fear resulted rate cuts expectation. Utility,  consumer goods goods are heavily related to domestic consumer spending, strong dollar raise buying power while utility consumer going up with more manufacturing plant demand for utility. But continue housing market slump will drag consumer demand, ( economic stimulus will not be sufficient to support the demand slowdown) economics into recession, manufacturing activity ISM already down to 47 .Despite ISM service sectors up to 52, it will not be sustainable stay above 50 after second quarter stimulus effect is over. Recent dollar strength come from better than expected 0.6 % GDP growth and soaring oil prices pushed inflation higher, forced Fed to end rate cycle earlier, facing inflation fighting.   However housing slump continue depress the economy, Fed facing Trilemma on rate, GDP, inflation, dollar. details on www.osawh.com/Fedcrisab.htm    www.osawh.com/currency.html    www.osagloobalsstrategicmanagement.com/blog1

OSA Market Blog: Rate cuts rally party is over, back to recessions fundamental Dr. Warren Huang

Thursday, May 1st, 2008
The party celenrating rate cuts, bail for banking, financial and IT shares rebound rally is over. From now on, market will face all the soaring oil, comodities, inflation, job cuts, sagging consumer confidence, housing price slump, credit default bad news.Markets will give up all its recent gain in the weeks ahead details  www.osawh.com/Globaloiln.htm www.osawh.com/recession.html www.osawh.com/mortdefa.htm
Comment by Warren Huang on Wall Street Journal Market Beat  - May 1, 2008 at 11:56 am